• Economy moderated sharply by 0.7% in 1Q20

• External demand and investments declined, while private consumption growth moderated

• The services and manufacturing sectors moderated while the other sectors contracted

• Current account registered a surplus of RM9.5bn or 2.6% of GDP

• Higher net inflow for FDI

• Recession is imminent

Malaysia's economic growth eased sharply in the first quarter due to the measures taken to contain the spread of the Covid-19 pandemic. Gross domestic product (GDP) grew 0.7% yoy, following a 3.6% rise in 4Q19, supported by domestic consumption. That was the slowest pace since 3Q09 when the economy contracted 1.2%. On a quarter-on-quarter seasonally-adjusted basis, the economy shrank 2.0% (4Q19: 0.6%).

In 1Q20, most sectors and components moderated. Overall, private sector spending (1Q20: 4.7%; 4Q19: 7.4%) continue to drive the economy. Growth in private consumption moderated while private investment contracted. Gross fixed capital formation remained with negative growth. On the production side, the performance was backed by services and manufacturing sectors. However, the mining & quarrying, construction and agriculture sectors recorded a decline.

Source: BIMB Securities Research - 14 May 2020